Executive Summary

• Target reported 2Q16 adjusted EPS of $1.23 versus the consensus estimate of $1.13.
• Comps were down 1.1% versus expectations of a 0.7% decline and guidance of flat–(2)%. Traffic was down 2.2%, but the decline was partially offset by a 2.6% increase in average selling price. Units per transaction were down 1.5%. Comps in Target’s signature categories were up 2%.
• Target lowered its full-year EPS guidance to $4.80–$5.20 from $5.20–$5.40 previously; consensus calls for EPS of $5.13. The company lowered its outlook for 2H16 comps based on the current retail environment. Management is planning for a challenging second half of the year.